Lhota’s Years Working for the Dolans

Joseph J. Lhota, now running for mayor, was a senior executive for the Dolan family after he left the Giuliani administration.Credit
Damon Winter/The New York Times

He pressed a financially strained city for millions of dollars in corporate subsidies. He opposed a law requiring paid sick leave for workers. He fired scores of blue-collar technicians during a union organizing drive.

Joseph J. Lhota, the Republican candidate for New York City mayor, is best known as one of former Mayor Rudolph W. Giuliani’s most trusted lieutenants. But he actually spent a greater part of his career in the employ of another polarizing chief executive known to be demanding: James L. Dolan, the billionaire cable TV and sports tycoon.

From 2002 to 2011, Mr. Lhota was a senior executive for the Dolans, owners of the Knicks, the Rangers, Madison Square Garden and Cablevision, and one of the city’s most prominent, if often unloved, families.

As the Garden’s top lobbyist, it was his job to seek favor, or avoid reprisal, from Mayor Michael R. Bloomberg on behalf of Mr. Dolan, who had crushed the mayor’s hopes for a new West Side stadium in 2005 with a campaign of blistering ads and relentless opposition.

A review of Mr. Lhota’s nearly 10 years with Cablevision and Madison Square Garden, however, shows he was an aggressive advocate of generous benefits for his employer’s business, which cost the city’s government millions of dollars a year in what some critics have called corporate welfare.

Asked in an interview about the law that gives the Garden, alone, a permanent exemption from property taxes, now worth around $17 million a year, Mr. Lhota said: “They passed it. Do I have any misgivings about the law? No.”

Records and interviews with Mr. Lhota and former associates suggest he made a smooth transition from city government to the publicly traded companies led by Mr. Dolan and his father, Charles. He ably executed the tasks at hand, whether investigating a sensitive accounting scandal involving a deceased former executive or helping to choreograph an intricately timed renovation of Madison Square Garden. He showed a survivor’s knack for emerging unscathed from messy internal disputes inside a corporate culture that is frequently described by former workers as bureaucratic and even stifling.

In the interview, Mr. Lhota declined to answer some questions, saying he was constrained by a nondisclosure agreement. But he said his jobs at Cablevision and the Garden provided evidence of his ability to parachute into thorny disputes and land on his feet. “I was what I’ve always been — somebody willing and open to roll up my sleeves and help to get the job done,” he said.

Mr. Lhota said he had not met Mr. Dolan until the waning days of the Giuliani administration, when an intermediary inquired whether Mr. Lhota would be interested in a Cablevision job. He was. He knew some of the company’s issues from his days in government: As deputy mayor, Mr. Lhota had signed off on changes in 1999 to the city’s franchise agreement with a Cablevision subsidiary called Lightpath, which was installing fiber-optic lines in commercial buildings so it could sell telephone service to businesses.

Photo

James L. Dolan is the chief executive for the Dolan family businesses.Credit
Carlo Allegri/Reuters

Cablevision hired him as an administrator, but Mr. Lhota said he pressed to have an opportunity to run a piece of the business. The Dolans gave him one small division along with his other duties: Lightpath.

“I did not want to be in a position of just sticking around the government and doing government-related issues,” he said. “Life’s more complex than that, and I wanted to participate in that complexity.”

At the time, Cablevision was battling an organizing drive by the International Brotherhood of Electrical Workers, which wanted to sign up hundreds of technicians. The company pushed back hard, with inducements and threats, said Rick Fridell, the union’s lead organizer.

“He was part of a management team that were ruthless,” Mr. Fridell said, though he acknowledged that he had never encountered Mr. Lhota personally in the organizing battle.

On his first conference call with analysts in August 2002, Mr. Lhota assured them that Lightpath would do “more — actually a lot more with less.” That fall, he announced that two rounds of job cuts, totaling around 150 workers, or 25 percent of Lightpath’s work force, had fueled an 89 percent jump in cash flow.

Mr. Lhota said the layoffs had nothing to do with the organizing fight and were driven by the company’s anemic performance that year. The union, however, viewed each round of layoffs as a carefully timed warning shot. “It sent a very clear message — ‘We can get rid of 70 people, just like that,’ ” Mr. Fridell said.

It succeeded, he said: Skittish technicians feared that they, too, could be laid off if the organizing effort dragged on. So the union brought it to a halt.

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Lightpath reported operating losses in eight of the 10 quarters in which Mr. Lhota was in charge. Still, by late 2004 he was up for a bigger job: Voom, a satellite television service started at great cost by Charles Dolan, was being spun off along with Cablevision’s three TV networks and its Clearview cinema chain — and Mr. Lhota was named the spinoff’s co-chief financial officer.

Then, in a power struggle with his father, James Dolan persuaded the Cablevision board not to spin off Voom but to sell it.

Mr. Lhota acknowledged that he was discouraged when the company was sold. But the disappointment was overshadowed by a personal crisis: He learned he had lymphoma, and spent every other Thursday in chemotherapy for six months before returning to full health, with the full support of the Dolan family.

“They were extremely concerned,” Mr. Lhota said.

For the next several years, he continued to hold a senior administrative role, but he allowed that it was at times unexciting. He chose health plans and explored long-term incentives to retain top executives. He tended Cablevision’s jets and helicopters, which the Dolans used to commute to work. He helped absorb Newsday personnel when Cablevision bought the paper, on Long Island. And it was his duty to reveal a security lapse that had jeopardized the personal data of 13,700 workers and retirees.

“But it was at a pace that was nothing like the pace I had had while I was in City Hall,” he said. “I mean, budget-director pace and deputy-mayor pace, while they are very different jobs, they are nonstop, 24-hour-a-day positions.”

“The flip side of it,” he added, “was I was being compensated on the private side.”

Indeed, in 2005, when his pay was detailed publicly in connection with the aborted Voom spinoff, Mr. Lhota earned $725,000 in base salary, a bonus of up to 70 percent of that, and $500,000 in restricted stock. (His tax returns show he received nearly $1.5 million in deferred pay from the Garden in 2012.)

When Madison Square Garden became its own publicly traded company in 2010, Mr. Lhota moved over, with added responsibility for government affairs.

He went to Albany to lobby over ticket-scalping legislation — and took in Rangers games with the powerful State Assembly speaker, Sheldon Silver.

His lobbyists ranged as far afield as Los Angeles County, where the Garden acquired the faded Forum arena in Inglewood, and persuaded the city, despite its choking deficits, to provide $18 million in subsidies for its redevelopment.

In New York City, Mr. Lhota argued against an anti-obesity campaign that could mean a crackdown on sugary sodas sold at the Garden, opposed a paid sick leave bill that he said would have been less generous than the Garden’s union deals anyway and pressed every possible lever of power to facilitate the Garden’s $1 billion renovation.

That project was hugely complicated. It involved rebuilding the arena in phases, with work to occur only during the summers — all night, seven days a week, with deadlines each October.

The project was also a test of the company’s relationship with the city, given the bitter battle over the West Side stadium. In the end, Mr. Lhota said, the Garden received all the help it needed, in part because the City Buildings Department realized how complex the project was. (The arena’s completed three-year renovation was unveiled last week.)

Mr. Lhota left the Garden in fall 2011 to become chairman of the Metropolitan Transportation Authority, avoiding the clash over renewal of the Garden’s 50-year special zoning permit, which led to only a 10-year extension. That battle prompted some lawmakers, like Assemblyman David I. Weprin, Democrat of Queens, to call for an end to the Garden’s perpetual exemption from property taxes.

After leaving the Garden and Cablevision, Mr. Lhota continued to socialize with former colleagues, including James Dolan. But he said he would have no trouble standing up to his old boss should he become mayor.

“I will do whatever I need to do as mayor to protect the interests of the City of New York,” he said. “People who know me know that I’m of strong integrity. Quite honestly, I’m offended by the notion.”

A version of this article appears in print on October 29, 2013, on Page A19 of the New York edition with the headline: Lhota’s Years in Private Industry Working for the Dolans. Order Reprints|Today's Paper|Subscribe